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KLR Wealth Insights: Monthly Market Update

August 30, 2019

What impact will the growing trade war with China, economic data in Europe and interest rate fluctuations have on the September markets? We explore in our latest update.

Equity markets had a generally discouraging performance in August, and it looks like this could carry through to September, due to the growing trade war with China, economic data in Europe and interest rate fluctuations. What does this mean for investors?

Key takeaways from August’s market performance

Check out my latest Monthly Market Update for a complete summary of August's performance, but here are a few key factors:

  • Despite the negative performance of equity markets, fixed income securities performed well.
  • The yield on the 30 year Treasury (“long bond”) fell to below 2%
  • The “shape” of the yield curve is the best predictor of future economic activity. An “inversion” in the yield curve has taken place, meaning the yields on shorter-term bonds exceeded that of those that mature later.
  • Something known as the “Dow Theory” compares the Dow Jones Industrial Average with the Dow Jones Transportation Index. It still holds true in 2019, but the Dow Industrials now include all major segments of the economy and the Transports include the airlines, truckers and shippers.
  • The Trade War in China, and violent tinge to the protests in Hong Kong might end up with a major global financial center being put out of business for some duration
  • The economic data in Europe is massively on the weaker side and that of the U.S. is showing signs of fraying, too.

All of these factors point to a potential “baby’ recession in 2020. Anything is possible in a trading-oriented market, impacted by massive day-to-day fluctuations in the economic and geo-political headlines.

Questions? Contact KLR Wealth Management, LLC.

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